When representing our members, all of whom hold governance responsibilities, be they in private, public or not-for-profit organisations, CSA is seen to be an ‘independent mind’. Our members’ views are shaped to the best governance outcomes, rather than seeking to protect the interests of any particular group of professionals. This independence of mind has seen CSA effect change in the following areas:

2009

Access to the register of members
CSA has been advocating for many years that reform is required in relation to access to and use of the register of members of companies and its treatment in the Corporations Act 2001. At present, the law does not provide acceptable privacy rights for shareholders in relation to public access to and use of their details on the register. The government issued an options paper in May for public consultation. CSA sees this as an unparalleled opportunity for the government to act to remedy the shortcomings in the current law to protect the interests of shareholders.

The appointment, resignation and removal of auditors
CSA works with ASIC and Treasury to create provision for notifying ASIC that the auditor appointed by the directors of a public company ceased to be auditor at the first AGM and that shareholders appointed a different auditor at the first AGM.

2008

The annual general meeting (AGM)
CSA convenes a Roundtable, with Blake Dawson, early in 2008 and in May releases a discussion paper Rethinking the AGM, setting out ideas for reform for public consultation. There is little support for the main suggestions in the discussion paper to separate the decision-making function from the deliberative function of the AGM; mandate webcasting of AGMs; and extend the statutory period for holding the AGM by one month. However, there is extended support for encouraging committee chairmen to speak to reports of their respective committees at AGMs, and for directors to speak to their candidature, but neither of these issues requires legislative change. CSA publishes a booklet, Effective AGMs, and a Guide to Procedures at AGMs to provide guidance on meetings that engage shareholders.

Disclosure of shareholdings subject to security interest or other third-party rights
CSA takes the lead in calling for the disclosure of directors’ shareholdings subject to security interest or other third party rights, such as margin loans. The issue is referred to CAMAC for consideration.

Reporting relief for wholly owned subsidiaries
ASIC releases the revised Class Order on reporting relief for wholly owned subsidiaries incorporating the changes advocated by CSA, thereby reducing the regulatory burden on companies.

Proxy advisory services and entities
CSA convenes a Roundtable to clarify how communication between proxy advisory services and entities can be improved to facilitate corporate accountability. Insight is provided for each party into the other’s needs and constraints. CSA issues a publication, Better communication between proxy advisory services and entities, setting out agreed good practice for both parties to facilitate improved dialogue.

Direct voting
In the 2008 AGM season, Telstra and Computershare offer direct voting to their shareholders More listed companies amend their constitutions to provide for direct voting — direct voting is now accepted as a means of providing for shareholders to exercise their voting rights. The PJC’s report on shareholder engagement and participation calls for direct voting as the default position for shareholder voting.

Personal liability for corporate fault
The Council of Australian Governments (COAG) agrees to progress increased harmonisation of the laws on the personal liability of company officers. In addition to federal laws, there are also state-based laws that govern officer liability, some of which are inconsistent or even contradictory. On another front, the Workplace Relations Ministers’ Council (WRMC) reach agreement on a framework for uniform OH&S laws which will address the disparate and inconsistent OH&S laws across jurisdictions.

2007

ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, 2nd ed (guidelines)
Feedback from CSA on the Exposure Draft of the ASX Corporate Governance Council’s guidelines was influential. The 2nd edition of the guidelines accords in large part with the submission made by CSA on various issues.

Reporting relief for wholly owned subsidiaries
Amendments to ASIC Class Order 98/1418 in 2005 change a straightforward process into something very complex. CSA advocates for change, noting that to join a new group member to a deed of cross guarantee that requires ASIC pre-approval, it is necessary for all members of the group seeking to rely on the Class Order (including the proposed new group member) to enter into a new deed of cross guarantee. In practice, this means that the only way in which companies can add new entities to existing cross guarantees is to revoke all existing cross guarantees and execute new ones, accompanied by a lawyer’s certificate. Revoking existing deeds and executing new ones places an exceptionally onerous compliance burden on companies.

Personal liability for corporate fault
CAMAC’s final report on this issue recommended that imposing personal liability for corporate fault be overhauled. This is in accord with CSA’s submission.

Direct voting
CSA publishes its Guide to direct voting, calling on Australian listed companies to implement provisions in their constitutions that will enable their shareholders to exercise their voting rights through direct voting, in addition to exercising their existing right to appoint a proxy holder. The Guide provides sample wording for constitutional change incorporating a right to use direct voting and sample rules for votes of members at general meetings. In the 2007 AGM season, a number of listecd companies, including Westpac, ANZ, Woolworths, Orica, Wesfarmers, Cochlear, Tassal Group Ltd and ING amended their constitutions to provide for direct voting.

Distribution of annual reports
Using research generated from its Benchmarking Governance in Practice in Australia survey, conducted over eight years, CSA advocates for reform to the distribution of annual reports. CSA’s research shows that more than 39 per cent of shareholders in companies in the top 20 listed companies elected not to receive an annual report of any kind, and more than one-quarter of shareholders in Australia’s top 200 companies elected not to receive an annual report of any kind. Yet only 35 per cent of shareholders in the largest companies elected to receive the concise annual report and the cost of producing an annual report per shareholder increases. CSA also points to environmental cost savings. The Simpler Regulatory System Act passes, providing for companies to elect to distribute annual reports by making them available on their websites, subject to certain administrative requirements. Hard copies of annual and concise reports will only be sent to shareholders requesting one. This changes the distribution of annual reports from the current opt-out scenario — members have to elect not to receive a copy of the annual report — to an opt-in scenario — members have to elect to receive a copy of the annual report.

Reporting of remuneration of executives and directors
The duplication of reporting of audited information about the remuneration of executives and directors in both s 300A of the Corporations Act and the Australian Accounting Standard AASB 1046 – Director and Executive Disclosures by Disclosing Entities was a matter requiring reform. The Simpler Regulatory System Act received Royal Assent on 28 June 2007. It incorporated in the Corporations Act the accounting standards requirements for executive and director remuneration disclosure. This meant that companies were no longer required to refer to both the accounting standards and the Corporations Act. The term ‘key management personnel’ (from the accounting standards) was added to the existing definition of all directors and the top five executives currently in the Act for the purposes of whose remuneration needs to be disclosed. The disclosures need only be made in the directors’ report and not the financial reports.

2006

Direct voting
CSA publishes its thought leadership project Expressing the voice of shareholders: a move to direct voting and issues it for public consultation. CSA receives positive responses to the paper, which shows that legislative amendment is not required for companies to introduce direct voting, but can be implemented, in most cases, with only minor changes to a company’s constitution. Telstra amends its constitution at the 2006 AGM to provide for direct voting.

Corporate social responsibility
The Parliamentary Joint Committee on Corporations and Financial Services’ (PJC) and the Corporations and Markets Advisory Committee’s (CAMAC) final reports on this issue agree with CSA’s submission that existing laws requiring directors to act in the best interests of the company as a whole already allow companies to take account of the impact of their decisions on stakeholders other than shareholders, such as employees, customers, suppliers, investors and the broader community.